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Start » startup, business plan financials: 3 statements to include.
The finance section of your business plan is essential to securing investors and determining whether your idea is even viable. Here's what to include.
If your business plan is the blueprint of how to run your company, the financials section is the key to making it happen. The finance section of your business plan is essential to determining whether your idea is even viable in the long term. It’s also necessary to convince investors of this viability and subsequently secure the type and amount of funding you need. Here’s what to include in your business plan financials.
[Read: How to Write a One-Page Business Plan ]
What are business plan financials?
Business plan financials is the section of your business plan that outlines your past, current and projected financial state. This section includes all the numbers and hard data you’ll need to plan for your business’s future, and to make your case to potential investors. You will need to include supporting financial documents and any funding requests in this part of your business plan.
Business plan financials are vital because they allow you to budget for existing or future expenses, as well as forecast your business’s future finances. A strongly written finance section also helps you obtain necessary funding from investors, allowing you to grow your business.
Sections to include in your business plan financials
Here are the three statements to include in the finance section of your business plan:
Profit and loss statement
A profit and loss statement , also known as an income statement, identifies your business’s revenue (profit) and expenses (loss). This document describes your company’s overall financial health in a given time period. While profit and loss statements are typically prepared quarterly, you will need to do so at least annually before filing your business tax return with the IRS.
Common items to include on a profit and loss statement :
- Revenue: total sales and refunds, including any money gained from selling property or equipment.
- Expenditures: total expenses.
- Cost of goods sold (COGS): the cost of making products, including materials and time.
- Gross margin: revenue minus COGS.
- Operational expenditures (OPEX): the cost of running your business, including paying employees, rent, equipment and travel expenses.
- Depreciation: any loss of value over time, such as with equipment.
- Earnings before tax (EBT): revenue minus COGS, OPEX, interest, loan payments and depreciation.
- Profit: revenue minus all of your expenses.
Businesses that have not yet started should provide projected income statements in their financials section. Currently operational businesses should include past and present income statements, in addition to any future projections.
[Read: Top Small Business Planning Strategies ]
A strongly written finance section also helps you obtain necessary funding from investors, allowing you to grow your business.
Balance sheet
A balance sheet provides a snapshot of your company’s finances, allowing you to keep track of earnings and expenses. It includes what your business owns (assets) versus what it owes (liabilities), as well as how much your business is currently worth (equity).
On the assets side of your balance sheet, you will have three subsections: current assets, fixed assets and other assets. Current assets include cash or its equivalent value, while fixed assets refer to long-term investments like equipment or buildings. Any assets that do not fall within these categories, such as patents and copyrights, can be classified as other assets.
On the liabilities side of your balance sheet, include a total of what your business owes. These can be broken down into two parts: current liabilities (amounts to be paid within a year) and long-term liabilities (amounts due for longer than a year, including mortgages and employee benefits).
Once you’ve calculated your assets and liabilities, you can determine your business’s net worth, also known as equity. This can be calculated by subtracting what you owe from what you own, or assets minus liabilities.
Cash flow statement
A cash flow statement shows the exact amount of money coming into your business (inflow) and going out of it (outflow). Each cost incurred or amount earned should be documented on its own line, and categorized into one of the following three categories: operating activities, investment activities and financing activities. These three categories can all have inflow and outflow activities.
Operating activities involve any ongoing expenses necessary for day-to-day operations; these are likely to make up the majority of your cash flow statement. Investment activities, on the other hand, cover any long-term payments that are needed to start and run your business. Finally, financing activities include the money you’ve used to fund your business venture, including transactions with creditors or funders.
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18 Best Sample Business Plans & Examples to Help You Write Your Own
Published: December 01, 2022
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Reading sample business plans is essential when you’re writing your own. As you explore business plan examples from real companies and brands, you’ll learn how to write one that gets your business off on the right foot, convinces investors to provide funding, and ensures your venture is sustainable for the long term.
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But what does a business plan look like? And how do you write one that is viable and convincing? Let's review the ideal business plan formal, then take a look at business plan samples you can use to inspire your own.
Business Plan Format
Ask any successful sports coach how they win so many games, and they’ll tell you they have a unique plan for every single game. The same logic applies to business. If you want to build a thriving company that can pull ahead of the competition, you need to prepare for battle before breaking into a market.
Business plans guide you along the rocky journey of growing a company. Referencing one will keep you on the path toward success. And if your business plan is compelling enough, it can also convince investors to give you funding.
With so much at stake, you might be wondering, "Where do I start? How should I format this?"
Typically, a business plan is a document that will detail how a company will achieve its goals.
Fill out the form to get your free template.
Most business plans include the following sections:
1. Executive Summary
The executive summary is arguably the most important section of the entire business plan. Essentially, it's the overview or introduction, written in a way to grab readers' attention and guide them through the rest of the business plan (which may be dozens or hundreds of pages long).
Most executive summaries include:
- Mission statement
- Company history and leadership
- Competitive advantage overview
- Financial projections
- Company goals
However, many of these topics will be covered in more detail later on in the business plan, so keep the executive summary clear and brief, including only the most important take-aways.
If you’re planning to start or expand a small business, preparing a business plan is still very crucial. The plan should include all the major factors of your business. You can check out this small business pdf to get an idea of how to create one for your business.
- What demographics will most likely need/buy your product or service?
- What are the psychographics of this audience? (Desires, triggering events, etc.)
- Why are your offerings valuable to them?
It can be helpful to build a buyer persona to get in the mindset of your ideal customers and be crystal clear on why you're targeting them.
5. Marketing Strategy
Here, you'll discuss how you'll acquire new customers with your marketing strategy. You might consider including information on:
- The brand positioning vision and how you'll cultivate it
- The goal targets you aim to achieve
- The metrics you'll use to measure success
- The channels and distribution tactics you'll use
It can help to already have a marketing plan built out to help you inform this component of your business plan.
6. Key Features and Benefits
At some point in your business plan, you'll review the key features and benefits of your products and/or services. Laying these out can give readers an idea of how you're positioning yourself in the market and the messaging you're likely to use . It can even help them gain better insight into your business model.
7. Pricing and Revenue
This is where you'll discuss your cost structure and various revenue streams. Your pricing strategy must be solid enough to turn a profit while staying competitive in the industry. For this reason, you might outline:
- The specific pricing breakdowns per product or service
- Why your pricing is higher or lower than your competition's
- (If higher) Why customers would be willing to pay more
- (If lower) How you're able to offer your products or services at a lower cost
- When you expect to break even, what margins do you expect, etc?
8. Financials
This section is particularly informative for investors and leadership teams to determine funding strategies, investment opportunities, etc. According to Forbes , you'll want to include three main things:
- Profit/Loss Statement - This answers the question of whether your business is currently profitable.
- Cash Flow Statement - This details exactly how much cash is incoming and outgoing to provide insight into how much cash a business has on hand.
- Balance Sheet - This outlines assets, liabilities, and equity, which gives insight into how much a business is worth.
While some business plans might include more or less information, these are the key details you'll want to include.
Keep in mind that each of these sections will be formatted differently. Some may be in paragraph format, while others will be in charts.
Sample Business Plan Templates
Now that you know what's included and how to format a business plan, let's review some templates.
1. HubSpot's One-Page Business Plan
Download a free, editable one-page business plan template..
The business plan linked above was created here at HubSpot and is perfect for businesses of any size — no matter how many strategies we still have to develop.
Fields such as Company Description, Required Funding, and Implementation Timeline gives this one-page business plan a framework for how to build your brand and what tasks to keep track of as you grow. Then, as the business matures, you can expand on your original business plan with a new iteration of the above document.
Why We Like It
This one-page business plan is a fantastic choice for the new business owner who doesn’t have the time or resources to draft a full-blown business plan. It includes all the essential sections in an accessible, bullet-point-friendly format. That way, you can get the broad strokes down before honing in on the details.
2. HubSpot's Downloadable Business Plan Template
One of the major business expenses is marketing. How you handle your marketing reflects your company’s revenue. We included this business plan to show you how you can ensure your marketing team is aligned with your overall business plan to get results. The plan also shows you how to track even the smallest metrics of your campaigns, like ROI and payback periods instead of just focusing on big metrics like gross and revenue.
Fintech startup, LiveFlow, allows users to sync real-time data from its accounting services, payment platforms, and banks into custom reports. This eliminates the task of pulling reports together manually, saving teams time and helping automate workflows.
When it came to including marketing strategy into its business plan, LiveFlow created a separate marketing profit and loss statement (P&L) to track how well the company was doing with its marketing initiatives. This is a great approach, allowing businesses to focus on where their marketing dollars are making the most impact.
“Using this framework over a traditional marketing plan will help you set a profitable marketing strategy taking things like CAC, LTV, Payback period, and P&L into consideration,” explains LiveFlow co-founder, Lasse Kalkar .
Having this information handy will enable you to build out your business plan’s marketing section with confidence. LiveFlow has shared the template here . You can test it for yourself.
2. Lula Body
This fictional business plan for an art supply store includes everything one might need in a business plan: an executive summary, a company summary, a list of services, a market analysis summary, and more. Due to its comprehensiveness, it’s an excellent example to follow if you’re opening a brick-and-mortar store and need to get external funding to start your business .
One of its most notable sections is its market analysis summary, which includes an overview of the population growth in the business’ target geographical area, as well as a breakdown of the types of potential customers they expect to welcome at the store. This sort of granular insight is essential for understanding and communicating your business’s growth potential. Plus, it lays a strong foundation for creating relevant and useful buyer personas .
It’s essential to keep this information up-to-date as your market and target buyer changes. For that reason, you should carry out market research as often as possible to ensure that you’re targeting the correct audience and sharing accurate information with your investors.
6. Curriculum Companion Suites (CSS)
If you’re looking for a SaaS business plan example, look no further than this business plan for a fictional educational software company called Curriculum Companion Suites. Like the business plan for the NALB Creative Center, it includes plenty of information for prospective investors and other key stakeholders in the business.
One of the most notable features of this business plan is the executive summary, which includes an overview of the product, market, and mission. The first two are essential for software companies because the product offering is so often at the forefront of the company’s strategy. Without that information being immediately available to investors and executives, then you risk writing an unfocused business plan.
It’s also essential to front-load your company’s mission if it explains your “Why?” In other words, why do you do what you do, and why should stakeholders care? This is an important section to include if you feel that your mission will drive interest in the business and its offerings.
7. Culina Sample Business Plan
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500+ Free business plan examples
Need help writing your business plan? Explore over 500 free real-world business plan examples from a wide variety of industries to guide you through writing your own plan. If you're looking for an intuitive tool that walks you through the plan writing process, we recommend LivePlan . It includes many of these same SBA-approved business plan examples and is especially useful when applying for a bank loan or outside investment.
Find your business plan
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Business plan template: There's an easier way to get your business plan done.
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Example business plan format
Before you start exploring our library of business plan examples, it's worth taking the time to understand the traditional business plan format . You'll find that the plans in this library and most investor-approved business plans will include the following sections:
Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you've written your full business plan.
Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).
Products & services
The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you're solving, your solution, and any traction that proves that it truly meets the need you identified.
This is your chance to explain why you're in business and that people care about what you offer. It needs to go beyond a simple product or service description and get to the heart of why your business works and benefits your customers.
Market analysis
Conducting a market analysis ensures that you fully understand the market that you're entering and who you'll be selling to. This section is where you will showcase all of the information about your potential customers. You'll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you're entering is viable and creating a realistic persona for your ideal customer base.
Competition
Part of defining your opportunity is determining what your competitive advantage may be. To do this effectively you need to get to know your competitors just as well as your target customers. Every business will have competition, if you don't then you're either in a very young industry or there's a good reason no one is pursuing this specific venture.
To succeed, you want to be sure you know who your competitors are, how they operate, necessary financial benchmarks, and how you're business will be positioned. Start by identifying who your competitors are or will be during your market research. Then leverage competitive analysis tools like the competitive matrix and positioning map to solidify where your business stands in relation to the competition.
Marketing & sales
The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You'll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.
The operations section covers the day-to-day workflows for your business to deliver your product or service. What's included here fully depends on the type of business. Typically you can expect to add details on your business location, sourcing and fulfillment, use of technology, and any partnerships or agreements that are in place.
Milestones & metrics
The milestones section is where you lay out strategic milestones to reach your business goals.
A good milestone clearly lays out the parameters of the task at hand and sets expectations for its execution. You'll want to include a description of the task, a proposed due date, who is responsible, and eventually a budget that's attached. You don't need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them.
You should also discuss key metrics, which are the numbers you will track to determine your success. Some common data points worth tracking include conversion rates, customer acquisition costs, profit, etc.
Company & team
Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure and history if you're already up and running.
Financial projections
Your financial plan should include a sales and revenue forecast, profit and loss statement, cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and start bringing in actual accounting data.
Now, if you intend to pitch to investors or submit a loan application, you'll also need a "use of funds" report in this section. This outlines how you intend to leverage any funding for your business and how much you're looking to acquire. Like the rest of your financials, this can always be updated later on.
The appendix isn't a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or out-of-place information that simply didn't work naturally into the structure of your plan. You'll notice that in these business plan examples, the appendix mainly includes extended financial statements.
Types of business plans explained
While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. To get the most out of your plan, it's best to find a format that suits your needs. Here are a few common business plan types worth considering.
Traditional business plan
The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you'll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or in any other situation where the full details of your business must be understood by another individual.
Business model canvas
The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.
The structure ditches a linear format in favor of a cell-based template. It encourages you to build connections between every element of your business. It's faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations.
One-page business plan
The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . This format is a simplified version of the traditional plan that focuses on the core aspects of your business.
By starting with a one-page plan , you give yourself a minimal document to build from. You'll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.
Growth planning
Growth planning is more than a specific type of business plan. It's a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, forecast, review, and refine based on your performance.
It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27 minutes . However, it's even easier to convert into a more detailed plan thanks to how heavily it's tied to your financials. The overall goal of growth planning isn't to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and remain stable through times of crisis.
It's faster, keeps your plan concise, and ensures that your plan is always up-to-date.
Download a free sample business plan template
Ready to start writing your own plan but aren't sure where to start? Download our free business plan template that's been updated for 2023.
This simple, modern, investor-approved business plan template is designed to make planning easy. It's a proven format that has helped over 1 million businesses write business plans for bank loans, funding pitches, business expansion, and even business sales. It includes additional instructions for how to write each section and is formatted to be SBA-lender approved. All you need to do is fill in the blanks.
How to use an example business plan to help you write your own
How do you know what elements need to be included in your business plan, especially if you've never written one before? Looking at examples can help you visualize what a full, traditional plan looks like, so you know what you're aiming for before you get started. Here's how to get the most out of a sample business plan.
Choose a business plan example from a similar type of company
You don't need to find an example business plan that's an exact fit for your business. Your business location, target market, and even your particular product or service may not match up exactly with the plans in our gallery. But, you don't need an exact match for it to be helpful. Instead, look for a plan that's related to the type of business you're starting.
For example, if you want to start a vegetarian restaurant, a plan for a steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business plan are likely to be very similar.
Use a business plan example as a guide
Every startup and small business is unique, so you'll want to avoid copying an example business plan word for word. It just won't be as helpful, since each business is unique. You want your plan to be a useful tool for starting a business —and getting funding if you need it.
One of the key benefits of writing a business plan is simply going through the process. When you sit down to write, you'll naturally think through important pieces, like your startup costs, your target market , and any market analysis or research you'll need to do to be successful.
You'll also look at where you stand among your competition (and everyone has competition), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials section can be helpful because you can see what should be included, but take them with a grain of salt. Don't assume that financial projections for a sample company will fit your own small business.
If you're looking for more resources to help you get started, our business planning guide is a good place to start. You can also download our free business plan template , or get started right away with LivePlan .
Think of business planning as a process, instead of a document
Think about business planning as something you do often , rather than a document you create once and never look at again. If you take the time to write a plan that really fits your own company, it will be a better, more useful tool to grow your business. It should also make it easier to share your vision and strategy so everyone on your team is on the same page.
Adjust your plan regularly to use it as a business management tool
Keep in mind that businesses that use their plan as a management tool to help run their business grow 30 percent faster than those businesses that don't. For that to be true for your company, you'll think of a part of your business planning process as tracking your actual results against your financial forecast on a regular basis.
If things are going well, your plan will help you think about how you can re-invest in your business. If you find that you're not meeting goals, you might need to adjust your budgets or your sales forecast. Either way, tracking your progress compared to your plan can help you adjust quickly when you identify challenges and opportunities—it's one of the most powerful things you can do to grow your business.
Prepare to pitch your business
If you're planning to pitch your business to investors or seek out any funding, you'll need a pitch deck to accompany your business plan. A pitch deck is designed to inform people about your business. You want your pitch deck to be short and easy to follow, so it's best to keep your presentation under 20 slides.
Your pitch deck and pitch presentation are likely some of the first things that an investor will see to learn more about your company. So, you need to be informative and pique their interest. Luckily, just like you can leverage an example business plan template to write your plan, we also have a gallery of over 50 pitch decks for you to reference.
With this gallery, you have the option to view specific industry pitches or get inspired by real-world pitch deck examples. Or for a modern pitch solution that helps you create a business plan and pitch deck side-by-side, you may want to check out LivePlan . It will help you build everything needed for outside investment and to better manage your business.
Get LivePlan in your classroom
Are you an educator looking for real-world business plan examples for your students? With LivePlan, you give your students access to industry-best business plans and help them set goals and track metrics with spreadsheet-free financial forecasts. All of this within a single tool that includes additional instructional resources that work seamlessly alongside your current classroom setup.
With LivePlan, it's not just a classroom project. It's your students planning for their futures. Click here to learn more about business planning for students .
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Pro Forma Financial Statements (with Templates and Examples)
Pro forma definition.
According to Merriam-Webster , “pro forma” means:
Made or carried out in a perfunctory manner or as a formality
Based on financial assumptions or projections
Pro forma is actually a Latin term meaning “for form” (or today we might say “for the sake of form, as a matter of form”).
When it comes to accounting, pro forma statements are financial reports for your business based on hypothetical scenarios. They’re a way for you to test out situations you think may happen in the future to help you make business decisions.
There are three major pro forma statements:
- Pro forma income statements
- Pro forma balance sheets
- Pro forma cash flow statements
Pro forma statements look like regular statements, except they’re based on what ifs, not real financial results. As in, “What if my business got a $50,000 loan next year?” Your pro forma statements for that scenario would show what your income, account balances, and cash flow would look like with a $50,000 loan.
Since pro forma statements deal with potential outcomes, they’re not considered GAAP (generally accepted accounting principles) compliant. This is because GAAP compliant reports must be based on historical information.
Pro forma statements don’t need to meet the strictest accounting standards, but must be clearly marked as “pro forma” and can’t be used for things like filing taxes. Using pro forma statements that aren’t marked as such to misrepresent your business to investors, the IRS, or financial institutions can be penalized by the Securities and Exchange Commission).
However, pro forma statements are still extremely useful. They can help you make a business plan, create a financial forecast , and even get funding from potential investors or lenders.
Different but related: you can send clients pro forma invoices to let them know how much their order would be if they placed it today.
Why create pro forma statements?
Creating pro forma statements for future scenarios can help you:
- Get financed, by showing lenders or investors how you would use their money to sustainably grow your business.
- Plan for the future, by considering best, worst, and most likely case scenarios in detail.
- Anticipate changes that may affect your business as it grows, such as entering a new tax bracket.
For these purposes, pro forma statements are typically created as a part of a financial forecast in financial accounting. Big corporations who have in-house accountants use pro forma statements for financial modeling and forecasting different scenarios.
Pro forma statements vs. budgets
It may be tempting to think of a pro forma statement as the same as a business budget . After all, you create both in anticipation of the future. And both help you plan how you’ll use your money. But budgets and pro forma statements are two distinct financial tools.
Think of it this way: A pro forma statement is a prediction, and a budget is a plan. Your budget may be based on the financial information of your pro forma statements—after all, it makes sense to make plans based on your predictions.
For example: Your income this year is $37,000. According to your pro forma annual income statement, your financial projections show it will be $44,000 next year. So, when you create next year’s budget, you can include that extra $7,000—maybe spending $4,000 over the course of the year to pay down the principal on a loan , while adding $3,000 to savings.
Types of pro forma statement
There are four main types of pro forma statements. While they all fall into the same categories—income statement, balance sheet, and cash flow statement—they differ based on the purpose of the financial forecast.
1. Full-year pro forma projection
This type of pro forma projection takes into account all of your financials for the fiscal year up until the present time, then adds projected outcomes for the remainder of the year. That can help you show investors or partners what business finances could look like by the end of the fiscal year.
2. Financing or investment pro forma projection
You may be courting investors or trying to convince your business partners of the value of a capital investment or additional financing. In that case, you can use a financing pro forma projection to make your case. It takes into account an injection of cash from an outside source—plus any interest payments you may need to make—and shows how it will affect your business’s financial position.
3. Historical with acquisition pro forma projection
This type of pro forma projection looks at the past financial statements of your business, plus the past financial statements of a business you want to buy . Then it merges them to show what your financials would have looked like if you made a business combination (or merger) earlier. You can use this scenario as a model of what may happen in the future if you buy the other business and restructure now.
4. Risk analysis pro forma projection
Looking at both best case and worst case scenarios helps you make financial decisions based on challenges you may face in the future. For instance, what happens if your main vendor raises their prices like they did last year? Or how will that proposed transaction of buying new equipment impact you long term? Risk analysis lets you take the future for a test ride, and try out different outcomes.
Pro forma templates
To create a pro forma statement, you can use the same template you’d use for a normal financial statement. You may want to use Bench’s free templates:
- Income statement
- Balance sheet
- Cash flow statement
How to create pro forma statements
The sample pro forma statements below may look different from the statements you create, depending on what your template looks like. But generally, these are the steps you need to take to create them—and the info your pro forma statements should include.
Creating a pro forma income statement
There are five steps to creating a pro forma income statement:
Set a goal for sales in the period you’re looking at. Let’s say you want to increase your income by $18,000 over the course of one year.
Set a production schedule that will let you reach your goal, and map it out over the time period you’re covering. In this case, you’ll want to earn an additional $1,500 income every month, for 12 months.
Plan how you’ll match your production schedule. You could do this by growing your number of sales a fixed amount every month, or gradually increasing the amount of sales you make per month. It’s up to you—trust your experience as a business owner.
It’s time for the “loss” part of “ Profit and Loss .” Calculate the cost of goods sold for each month in your projection. Then, deduct it from your sales. Deduct any other operating expenses you have, as well.
Prepare your pro forma income statement using data you’ve compiled in the prior four steps.
One note: your pro forma statements will be much more accurate if your bookkeeping is up to date. That way, when you project future periods, you’re basing it off the reality of your business today.
How Bench can help
To predict the future, you first need to understand the past. With Bench, you get a crystal clear image of your financial history so you can focus on planning your future. We’re America’s largest bookkeeping service helping thousands of business owners better understand the financial health of their operations so they can keep focused on growth and planning. When it comes time to create a pro forma statement, you have reliable numbers and reports to get started. We may not be a crystal ball, but we’re the next best thing. Learn more .
Example pro forma income statement:
Rosalia’s Reliable Recordings
Creating a pro forma cash flow statement
You create a pro forma cash flow statement much the same way you’d create a normal cash flow statement. That means taking info from the income statement, then using the cash flow statement format to plot out where your money is going, and what you’ll have on hand at any one time. This pro forma statement can be part of a larger cash flow forecast used for decision making.
Your projected cash flow can give you a few different insights. If it’s negative, it means you won’t have enough cash on-hand to run your business, according to your current trajectory. You’ll have to make plans to borrow money and pay it off.
On the other hand, if net cash flow is positive, you can plan on having enough extra cash on hand to pay off loans, or save for a big investment.
Example pro forma cash flow statement
Mickie’s Murakami Museum
Creating a pro forma balance sheet
By drawing on info from the income statement and the cash flow statement, you can create pro forma balance sheets. However, you’ll also need previous balance sheets to make this useful—so you can see how your business got from “Balance A” to “Balance B.”
The balance sheet will project changes in your business accounts over time. So you can plan where to move money, when.
Example pro forma balance sheet
Daily Dumpling Deliveries
Once you’ve created your pro forma income statements, and cast your eyes forward to the future of your business, you can start planning how you’ll spend your money. It’s time to create a small business budget .
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.
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How to Craft the Financial Section of Business Plan (Hint: It’s All About the Numbers)
Writing a small business plan takes time and effort … especially when you have to dive into the numbers for the financial section. But, working on the financial section of business plan could lead to a big payoff for your business.
Read on to learn what is the financial section of a business plan, why it matters, and how to write one for your company.
What is the financial section of business plan?
Generally, the financial section is one of the last sections in a business plan. It describes a business’s historical financial state (if applicable) and future financial projections. Businesses include supporting documents such as budgets and financial statements, as well as funding requests in this section of the plan.
The financial part of the business plan introduces numbers. It comes after the executive summary, company description , market analysis, organization structure, product information, and marketing and sales strategies.
Businesses that are trying to get financing from lenders or investors use the financial section to make their case. This section also acts as a financial roadmap so you can budget for your business’s future income and expenses.
Why it matters
The financial section of the business plan is critical for moving beyond wordy aspirations and into hard data and the wonderful world of numbers.
Through the financial section, you can:
- Forecast your business’s future finances
- Budget for expenses (e.g., startup costs)
- Get financing from lenders or investors
- Grow your business
- Growth : 64% of businesses with a business plan were able to grow their business, compared to 43% of businesses without a business plan.
- Financing : 36% of businesses with a business plan secured a loan, compared to 18% of businesses without a plan.
So, if you want to possibly double your chances of securing a business loan, consider putting in a little time and effort into your business plan’s financial section.
Writing your financial section
To write the financial section, you first need to gather some information. Keep in mind that the information you gather depends on whether you have historical financial information or if you’re a brand-new startup.
Your financial section should detail:
- Business expenses
Financial projections
Financial statements, break-even point, funding requests, exit strategy, business expenses.
Whether you’ve been in business for one day or 10 years, you have expenses. These expenses might simply be startup costs for new businesses or fixed and variable costs for veteran businesses.
Take a look at some common business expenses you may need to include in the financial section of business plan:
- Licenses and permits
- Cost of goods sold
- Rent or mortgage payments
- Payroll costs (e.g., salaries and taxes)
- Utilities
- Equipment
- Supplies
- Advertising
Write down each type of expense and amount you currently have as well as expenses you predict you’ll have. Use a consistent time period (e.g., monthly costs).
Indicate which expenses are fixed (unchanging month-to-month) and which are variable (subject to changes).
How much do you anticipate earning from sales each month?
If you operate an existing business, you can look at previous monthly revenue to make an educated estimate. Take factors into consideration, like seasonality and economic ups and downs, when basing projections on previous cash flow.
Coming up with your financial projections may be a bit trickier if you are a startup. After all, you have nothing to go off of. Come up with a reasonable monthly goal based on things like your industry, competitors, and the market. Hint : Look at your market analysis section of the business plan for guidance.
A financial statement details your business’s finances. The three main types of financial statements are income statements, cash flow statements, and balance sheets.
Income statements summarize your business’s income and expenses during a period of time (e.g., a month). This document shows whether your business had a net profit or loss during that time period.
Cash flow statements break down your business’s incoming and outgoing money. This document details whether your company has enough cash on hand to cover expenses.
The balance sheet summarizes your business’s assets, liabilities, and equity. Balance sheets help with debt management and business growth decisions.
If you run a startup, you can create “pro forma financial statements,” which are statements based on projections.
If you’ve been in business for a bit, you should have financial statements in your records. You can include these in your business plan. And, include forecasted financial statements.
You’re just in luck. Check out our FREE guide, Use Financial Statements to Assess the Health of Your Business , to learn more about the different types of financial statements for your business.
Potential investors want to know when your business will reach its break-even point. The break-even point is when your business’s sales equal its expenses.
Estimate when your company will reach its break-even point and detail it in the financial section of business plan.
If you’re looking for financing, detail your funding request here. Include how much you are looking for, list ideal terms (e.g., 10-year loan or 15% equity), and how long your request will cover.
Remember to discuss why you are requesting money and what you plan on using the money for (e.g., equipment).
Back up your funding request by emphasizing your financial projections.
Last but not least, your financial section should also discuss your business’s exit strategy. An exit strategy is a plan that outlines what you’ll do if you need to sell or close your business, retire, etc.
Investors and lenders want to know how their investment or loan is protected if your business doesn’t make it. The exit strategy does just that. It explains how your business will make ends meet even if it doesn’t make it.
When you’re working on the financial section of business plan, take advantage of your accounting records to make things easier on yourself. For organized books, try Patriot’s online accounting software . Get your free trial now!
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How to Write the Financial Section of a Business Plan
Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.
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Taking Stock of Expenses
The income statement, the cash flow projection, the balance sheet.
The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea. The financial section is composed of four financial statements: the income statement, the cash flow projection, the balance sheet, and the statement of shareholders' equity. It also should include a brief explanation and analysis of these four statements.
Think of your business expenses as two cost categories: your start-up expenses and your operating expenses. All the costs of getting your business up and running should be considered start-up expenses. These may include:
- Business registration fees
- Business licensing and permits
- Starting inventory
- Rent deposits
- Down payments on a property
- Down payments on equipment
- Utility setup fees
Your own list will expand as soon as you start to itemize them.
Operating expenses are the costs of keeping your business running . Think of these as your monthly expenses. Your list of operating expenses may include:
- Salaries (including your own)
- Rent or mortgage payments
- Telecommunication expenses
- Raw materials
- Distribution
- Loan payments
- Office supplies
- Maintenance
Once you have listed all of your operating expenses, the total will reflect the monthly cost of operating your business. Multiply this number by six, and you have a six-month estimate of your operating expenses. Adding this amount to your total startup expenses list, and you have a ballpark figure for your complete start-up costs.
Now you can begin to put together your financial statements for your business plan starting with the income statement.
The income statement shows your revenues, expenses, and profit for a particular period—a snapshot of your business that shows whether or not your business is profitable. Subtract expenses from your revenue to determine your profit or loss.
While established businesses normally produce an income statement each fiscal quarter or once each fiscal year, for the purposes of the business plan, an income statement should be generated monthly for the first year.
Not all of the categories in this income statement will apply to your business. Eliminate those that do not apply, and add categories where necessary to adapt this template to your business.
If you have a product-based business, the revenue section of the income statement will look different. Revenue will be called sales, and you should account for any inventory.
The cash flow projection shows how cash is expected to flow in and out of your business. It is an important tool for cash flow management because it indicates when your expenditures are too high or if you might need a short-term investment to deal with a cash flow surplus. As part of your business plan, the cash flow projection will show how much capital investment your business idea needs.
For investors, the cash flow projection shows whether your business is a good credit risk and if there is enough cash on hand to make your business a good candidate for a line of credit, a short-term loan , or a longer-term investment. You should include cash flow projections for each month over one year in the financial section of your business plan.
Do not confuse the cash flow projection with the cash flow statement. The cash flow statement shows the flow of cash in and out of your business. In other words, it describes the cash flow that has occurred in the past. The cash flow projection shows the cash that is anticipated to be generated or expended over a chosen period in the future.
There are three parts to the cash flow projection:
- Cash revenues: Enter your estimated sales figures for each month. Only enter the sales that are collectible in cash during each month you are detailing.
- Cash disbursements: Take the various expense categories from your ledger and list the cash expenditures you actually expect to pay for each month.
- Reconciliation of cash revenues to cash disbursements: This section shows an opening balance, which is the carryover from the previous month's operations. The current month's revenues are added to this balance, the current month's disbursements are subtracted, and the adjusted cash flow balance is carried over to the next month.
The balance sheet reports your business's net worth at a particular point in time. It summarizes all the financial data about your business in three categories:
- Assets : Tangible objects of financial value that are owned by the company.
- Liabilities: Debt owed to a creditor of the company.
- Equity: The net difference when the total liabilities are subtracted from the total assets.
The relationship between these elements of financial data is expressed with the equation: Assets = Liabilities + Equity .
For your business plan , you should create a pro forma balance sheet that summarizes the information in the income statement and cash flow projections. A business typically prepares a balance sheet once a year.
Once your balance sheet is complete, write a brief analysis for each of the three financial statements. The analysis should be short with highlights rather than in-depth analysis. The financial statements themselves should be placed in your business plan's appendices.
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What Are Financial Statements?
- Their Purpose
Balance Sheet
Income statement, cash flow statement.
- Changes In Equity
- Comprehensive Income
Nonprofit Financial Statements
- Limitations
The Bottom Line
- Corporate Finance
Financial Statements
Financial Statements: List of Types and How to Read Them
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Investopedia / Julie Bang
Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes. For-profit primary financial statements include the balance sheet, income statement, statement of cash flow, and statement of changes in equity. Nonprofit entities use a similar but different set of financial statements.
Key Takeaways
- Financial statements are written records that convey the business activities and the financial performance of an entity.
- The balance sheet provides an overview of assets, liabilities, and shareholders' equity as a snapshot in time.
- The income statement primarily focuses on a company’s revenues and expenses during a particular period. Once expenses are subtracted from revenues, the statement produces a company's profit figure called net income.
- The cash flow statement (CFS) measures how well a company generates cash to pay its debt obligations, fund its operating expenses, and fund investments.
- The statement of changes in equity records how profits are retained within a company for future growth or distributed to external parties.
Understanding Financial Statements
Investors and financial analysts rely on financial data to analyze the performance of a company and make predictions about the future direction of the company's stock price. One of the most important resources of reliable and audited financial data is the annual report , which contains the firm's financial statements.
The financial statements are used by investors, market analysts, and creditors to evaluate a company's financial health and earnings potential. The three major financial statement reports are the balance sheet, income statement, and statement of cash flows.
Not all financial statements are created equally. The rules used by U.S. companies is called Generally Accepted Accounting Principles, while the rules often used by international companies is International Financial Reporting Standards (IFRS). In addition, U.S. government agencies use a different set of financial reporting rules.
The balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity as a snapshot in time. The date at the top of the balance sheet tells you when the snapshot was taken, which is generally the end of the reporting period. Below is a breakdown of the items in a balance sheet.
- Cash and cash equivalents are liquid assets, which may include Treasury bills and certificates of deposit.
- Accounts receivables are the amount of money owed to the company by its customers for the sale of its product and service.
- Inventory is the goods a company has on hand, which are intended to be sold as a course of business. Inventory may include finished goods, work in progress that is not yet finished, or raw materials on hand that have yet to be worked.
- Prepaid expenses are costs that have been paid in advance of when they are due. These expenses are recorded as an asset because their value of them has not yet been recognized; should the benefit not be recognized, the company would theoretically be due a refund.
- Property, plant, and equipment are capital assets owned by a company for its long-term benefit. This includes buildings used for manufacturing or heavy machinery used for processing raw materials.
- Investments are assets held for speculative future growth. These aren't used in operations; they are simply held for capital appreciation.
- Trademarks, patents, goodwill, and other intangible assets can't physically be touched but have future economic (and often long-term benefits) for the company.
Liabilities
- Accounts payable are the bills due as part of the normal course of operations of a business. This includes utility bills, rent invoices, and obligations to buy raw materials.
- Wages payable are payments due to staff for time worked.
- Notes payable are recorded debt instruments that record official debt agreements including the payment schedule and amount.
- Dividends payable are dividends that have been declared to be awarded to shareholders but have not yet been paid.
- Long-term debt can include a variety of obligations including sinking bond funds, mortgages, or other loans that are due in their entirety in longer than one year. Note that the short-term portion of this debt is recorded as a current liability.
Shareholders' Equity
- Shareholders' equity is a company's total assets minus its total liabilities. Shareholders' equity (also known as stockholders' equity ) represents the amount of money that would be returned to shareholders if all of the assets were liquidated and all of the company's debt was paid off.
- Retained earnings are part of shareholders' equity and are the amount of net earnings that were not paid to shareholders as dividends.
Example of a Balance Sheet
Below is a portion of ExxonMobil Corporation's (XOM) balance sheet for fiscal year 2021, reported as of Dec. 31, 2021.
- Total assets were $338.9 billion.
- Total liabilities were $163.2 billion.
- Total equity was $175.7 billion.
- Total liabilities and equity were $338.9 billion, which equals the total assets for the period.
Unlike the balance sheet, the income statement covers a range of time, which is a year for annual financial statements and a quarter for quarterly financial statements. The income statement provides an overview of revenues, expenses, net income, and earnings per share.
Operating revenue is the revenue earned by selling a company's products or services. The operating revenue for an auto manufacturer would be realized through the production and sale of autos. Operating revenue is generated from the core business activities of a company.
Non-operating revenue is the income earned from non-core business activities. These revenues fall outside the primary function of the business. Some non-operating revenue examples include:
- Interest earned on cash in the bank
- Rental income from a property
- Income from strategic partnerships like royalty payment receipts
- Income from an advertisement display located on the company's property
Other income is the revenue earned from other activities. Other income could include gains from the sale of long-term assets such as land, vehicles, or a subsidiary.
Primary expenses are incurred during the process of earning revenue from the primary activity of the business. Expenses include the cost of goods sold (COGS), selling, general and administrative expenses (SG&A), depreciation or amortization, and research and development (R&D).
Typical expenses include employee wages, sales commissions, and utilities such as electricity and transportation.
Expenses that are linked to secondary activities include interest paid on loans or debt. Losses from the sale of an asset are also recorded as expenses.
The main purpose of the income statement is to convey details of profitability and the financial results of business activities; however, it can be very effective in showing whether sales or revenue is increasing when compared over multiple periods.
Investors can also see how well a company's management is controlling expenses to determine whether a company's efforts in reducing the cost of sales might boost profits over time.
Example of an Income Statement
Below is a portion of ExxonMobil Corporation's income statement for fiscal year 2021, reported as of Dec. 31, 2021.
- Total revenue was $276.7 billion.
- Total costs were $254.4 billion.
- Net income or profit was $23 billion.
The cash flow statement (CFS) measures how well a company generates cash to pay its debt obligations, fund its operating expenses, and fund investments. The cash flow statement complements the balance sheet and income statement .
The CFS allows investors to understand how a company's operations are running, where its money is coming from, and how money is being spent. The CFS also provides insight as to whether a company is on a solid financial footing.
There is no formula, per se, for calculating a cash flow statement. Instead, it contains three sections that report cash flow for the various activities for which a company uses its cash. Those three components of the CFS are listed below.
Operating Activities
The operating activities on the CFS include any sources and uses of cash from running the business and selling its products or services. Cash from operations includes any changes made in cash accounts receivable, depreciation, inventory, and accounts payable . These transactions also include wages, income tax payments, interest payments, rent, and cash receipts from the sale of a product or service.
Investing Activities
Investing activities include any sources and uses of cash from a company's investments in the long-term future of the company. A purchase or sale of an asset, loans made to vendors or received from customers, or any payments related to a merger or acquisition is included in this category.
Also, purchases of fixed assets such as property, plant, and equipment (PPE) are included in this section. In short, changes in equipment, assets, or investments relate to cash from investing.
Financing Activities
Cash from financing activities includes the sources of cash from investors or banks, as well as the uses of cash paid to shareholders. Financing activities include debt issuance, equity issuance, stock repurchases, loans, dividends paid, and repayments of debt.
The cash flow statement reconciles the income statement with the balance sheet in three major business activities.
Example of a Cash Flow Statement
Below is a portion of ExxonMobil Corporation's cash flow statement for fiscal year 2021, reported as of Dec. 31, 2021. We can see the three areas of the cash flow statement and their results.
- Operating activities generated a positive cash flow of $48 billion.
- Investing activities generated negative cash flow or cash outflows of -$10.2 billion for the period. Additions to property, plant, and equipment made up the majority of cash outflows, which means the company invested in new fixed assets.
- Financing activities generated negative cash flow or cash outflows of -$35.4 billion for the period. Reductions in short-term debt and dividends paid out made up the majority of the cash outflows.
Statement of Changes in Shareholder Equity
The statement of changes in equity tracks total equity over time. This information ties back to a balance sheet for the same period; the ending balance on the change of equity statement is equal to the total equity reported on the balance sheet.
The formula for changes to shareholder equity will vary from company to company; in general, there are a couple of components:
- Beginning equity: this is the equity at the end of the last period that simply rolls to the start of the next period.
- (+) Net income: this is the amount of income the company earned in a given period. The proceeds from operations are automatically recognized as equity in the company, and this income is rolled into retained earnings at year-end.
- (-) Dividends: this is the amount of money that is paid out to shareholders from profits. Instead of keeping all of a company's profits, the company may choose to give some profits away to investors.
- (+/-) Other comprehensive income : this is the period-over-period change in other comprehensive income. Depending on transactions, this figure may be an addition or subtraction from equity.
In ExxonMobil's statement of changes in equity, the company also records activity for acquisitions, dispositions, amortization of stock-based awards, and other financial activity. This information is useful to analyze to determine how much money is being retained by the company for future growth as opposed to being distributed externally.
Statement of Comprehensive Income
An often less utilized financial statement, a statement of comprehensive income summarizes standard net income while also incorporating changes in other comprehensive income (OCI). Other comprehensive income includes all unrealized gains and losses that are not reported on the income statement. This financial statement shows a company's total change in income, even gains and losses that have yet to be recorded in accordance to accounting rules.
Examples of transactions that are reported on the statement of comprehensive income include:
- Net income (from the statement of income).
- Unrealized gains or losses from debt securities
- Unrealized gains or losses from derivative instruments
- Unrealized translation adjustments due to foreign currency
- Unrealized gains or losses from retirement programs
In the example below, ExxonMobil has over $2 billion of net unrecognized income. Instead of reporting just $23.5 billion of net income, ExxonMobil reports nearly $26 billion of total income when considering other comprehensive income.
Nonprofit organizations record financial transactions across a similar set of financial statements. However, due to the differences between a for-profit entity and a purely philanthropic entity, there are differences in the financial statements used. The standard set of financial statements used for a nonprofit entity includes:
- Statement of Financial Position: this is the equivalent of a for-profit entity's balance sheet. The largest difference is nonprofit entities do not have equity positions; any residual balances after all assets have been liquidated and liabilities have been satisfied are called "net assets"
- Statement of Activities: this is the equivalent of a for-profit entity's statement of income. This report tracks the changes in operation over time including the reporting of donations, grants, event revenue, and expenses to make everything happen.
- Statement of Functional Expenses: this is specific to non-profit entities. The statement of functional expenses reports expenses by entity function (often broken into administrative, program, or fundraising expenses). This information is distributed to the public to explain what proportion of company-wide expenses are related directly to the mission.
- Statement of Cash Flow: this is the equivalent of a for-profit entity's statement of cash flow. Though the accounts listed may vary due to the different nature of a nonprofit organization, the statement is still divided into operating, investing, and financing activities.
The purpose of an external auditor is to assess whether an entity's financial statements have been prepared in accordance with prevailing accounting rules and whether there are any material misstatements impacting the validity of results.
Limitations of Financial Statements
Although financial statements provide a wealth of information on a company, they do have limitations. The statements are open to interpretation, and as a result, investors often draw vastly different conclusions about a company's financial performance.
For example, some investors might want stock repurchases while other investors might prefer to see that money invested in long-term assets. A company's debt level might be fine for one investor while another might have concerns about the level of debt for the company.
When analyzing financial statements, it's important to compare multiple periods to determine if there are any trends as well as compare the company's results to its peers in the same industry.
Last, financial statements are only as reliable as the information being fed into the reports. Too often, it's been documented that fraudulent financial activity or poor control oversight have led to misstated financial statements intended to mislead users. Even when analyzing audited financial statements, there is a level of trust that users must place in the validity of the report and the figures being shown.
What Are the Main Types of Financial Statements?
The three main types of financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues and costs, as well as its cash flows from operating, investing, and financing activities.
What Are the Main Items Shown in Financial Statements?
Depending on the corporation, the line items in a financial statement will differ; however, the most common line items are revenues, costs of goods sold, taxes, cash, marketable securities, inventory, short-term debt, long-term debt, accounts receivable, accounts payable, and cash flows from investing, operating, and financing activities.
What Are the Benefits of Financial Statements?
Financial statements show how a business operates. It provides insight into how much and how a business generates revenues, what the cost of doing business is, how efficiently it manages its cash, and what its assets and liabilities are. Financial statements provide all the detail on how well or poorly a company manages itself.
How Do You Read Financial Statements?
Financial statements are read in several different ways. First, financial statements can be compared to prior periods to better understand changes over time. For example, comparative income statements report what a company's income was last year and what a company's income is this year. Noting the year-over-year change informs users of the financial statements of a company's health.
Financial statements are also read by comparing the results to competitors or other industry participants. By comparing financial statements to other companies, analysts can get a better sense of which companies are performing the best and which are lagging behind the rest of the industry.
What Is GAAP?
Generally Accepted Accounting Principles (GAAP) are the set of rules by which United States companies must prepare their financial statements. It is the guidelines that explain how to record transactions, when to recognize revenue, and when expenses must be recognized. International companies may use a similar but different set of rules called International Financial Reporting Standards (IFRS).
Financial statements are the ticket to the external evaluation of a company's financial performance. The balance sheet reports a company's financial health through its liquidity and solvency, while the income statement reports a company's profitability. A statement of cash flow ties these two together by tracking sources and uses of cash. Together, financial statements communicate how a company is doing over time and against its competitors.
ExxonMobil. " 2021 Annual Report ," Page 72.
ExxonMobil. " 2021 Annual Report ," Page 70.
ExxonMobil. " 2021 Annual Report ," Page 73.
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Original text
Financial projections use existing or estimated financial data to forecast your business’s future income and expenses. They often include different scenarios so you can see how changes to one aspect of your finances (such as higher sales or lower operating expenses) might affect your profitability.
If you need to create financial projections for a startup or existing business, this free, downloadable template includes all the tools you need.
What are financial projections used for.
Financial projections are an important business planning tool for several reasons.
- If you’re starting a business, financial projections help you plan your startup budget, assess when you can expect the business to become profitable, and set benchmarks for achieving financial goals.
- If you’re already in business, creating financial projections each year can help you set goals and stay on track.
- When seeking outside financing, both startups and existing businesses will need financial projections to convince lenders and investors of the business’s growth potential.
What’s Included in Financial Projections?
This financial projections template pulls together several different financial documents, including:
- Startup expenses
- Payroll costs
- Sales forecast
- Operating expenses for the first 3 years of business
- Cash flow statements for the first 3 years in business
- Income statements for the first 3 years in business
- Balance sheet
- Break-even analysis
- Financial ratios
- Cost of goods sold (COGS), and
- Amortization and depreciation for your business.
You can either use this template to create the documents from scratch or pull in information from documents you’ve already created. The template also includes diagnostic tools you can use to test the numbers in your financial projections and make sure they are within reasonable ranges.
All of these areas are closely related, so as you work on your financial projections, you’ll find that changes to one element affect the others. You may want to include a best-case and worst-case scenario to account for all possibilities. Make sure you know the assumptions behind your financial projections and can explain them to others.
Startup business owners often wonder how to create financial projections for a business that doesn’t exist yet. Financial projections are always educated guesses. To make yours as accurate as possible, do your homework and get help. Use the information you unearthed in researching your business plans, such as statistics from industry associations, data from government sources, and financials from similar businesses. An accountant with experience in your industry can be useful in fine-tuning your financial projections. So can business advisors such as SCORE mentors.
Once you complete your financial projections, don’t put them away and forget about them. Compare your projections to your actual financial statements on a regular basis to see how well your business is meeting your expectations. If your projections turn out to be too optimistic or too pessimistic, make the necessary adjustments to make them more accurate.
*NOTE: The cells with formulas in this workbook are locked. If changes are needed, the unlock code is "1234." Please use caution when unlocking the spreadsheets. If you want to change a formula, we strongly recommend that you save a copy of this spreadsheet under a different name before doing so.
For assistance in completing this template, we recommend downloading the Financial Projections Template Guide in English or Espanol .
You can also see a completed sample by downloading the Ann's Nursery Example .
Do you need help creating your financial projections? Take SCORE’s online course on-demand on financial projections or connect with a SCORE mentor online or in your community today.
Simple Steps for Starting Your Business: Module 4 - Financial Projections In this online module, you'll learn the importance of financial planning, how to build your financial model, how to understand financial statements and more.
Business Planning & Financial Statements Template Gallery Download SCORE’s templates to help you plan for a new business startup or grow your existing business.
Copyright © 2023 SCORE Association, SCORE.org
Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
Business bank statement: Examples and benefits
A business bank statement is more than a record of all the transactions your business makes each month: It’s a valuable tool that can help you manage your business finances and keep spending in check . Let’s dive into the typical business bank statement and its benefits so that you know how to read and use it to your benefit.
What is a business bank statement?
A business bank statement summarizes all your transactions for a set period (usually one month or 30 days). Your bank statement gives you a bird’s eye view of financial transactions coming and going out of your business checking account or savings account.
By looking at the information in your business bank statements, you can better track your financial history and make smarter decisions regarding planning and creating a budget, which we’ll break down later.
What's on a bank statement?
Not all business bank statements look the same, but there are a few requirements every financial institution has to include on theirs. You can expect the following on your account statement, whether you’re looking at electronic statements or paper statements.
Information about the bank
You’ll see the bank name and contact information, usually toward the top of the statement. The contact info could include a branch mailing address, customer service phone number, and email address.
Information about the account holders
Bank statements will have your company’s name (or your name if you’re the account holder) and your address and account number . This identifying information lets you know you’re looking at the correct bank statement and makes it an official record for accounting purposes.
Transaction information
A business bank statement includes details for every transaction, including checks paid, service charges, deposits, and withdrawals. These transactions will be numbered, so they’re specifically tailored to your spending frequency: For example, if you only made 50 transactions last month, your last transaction will be numbered 50.
Paper statements vs. electronic statements
You can access your statements every statement period — and, to make things easier, banks automatically send one each month, whether paper or electronic.
A paper statement will be mailed to your address on file, and an electronic statement will be sent to the email on file. An electronic statement , also known as an e-statement, is a file you securely view online.
While you can log in at any time to see your e-statements, you may need to go through typical online security measures, like one- or two-factor authentications, since you’ll also have access to your accounts.
By tracking which device you’re logging in on, these security measures verify your identity and reduce the risk of fraud and theft.
What does a business bank statement look like?
Business bank statements are loaded with helpful information for small business owners split into the account summary and the account details . Let’s look at a bank statement example to illustrate the different parts you should be familiar with.
Account summary
The statement below shows a summary of transaction activity from July 3, 2018, to August 2, 2018. The summary lists the beginning balance, total withdrawals, deposits, and ending balance — giving you a snapshot of spending habits and income for the month.
In this example, the business didn’t have any deposits or credits. The statement shows that it started with an opening balance of $280,692.25 and finished with $271,024.36 after spending $9,667.89 on business expenses.
Use this information to gauge whether this is a healthy spend for your business. Is $9,667.89 beyond your means? Did you spend less than you anticipated? Or is just where you expect it to be?
Account activity details
The bottom half of the bank statement will show activity details, where the transactions are listed in chronological order. Your business bank statement shows the transaction’s date, description, and how much was debited or credited for each one.
While you might feel tempted to gloss over these transactions, having them laid out in front of you is an essential tool: You can easily find errors and unauthorized transactions that may point to theft or being charged accidentally.
When you find discrepancies like this, you can report them to the bank to open a case or receive a refund.
Benefits of tracking your business bank statements
As a small business owner, you need to know what you’re spending money on vs. how much you have in your bank account . But you won’t get this information from standard financial documents like the income statement and balance sheet.
That’s where the business bank statement comes in: Business bank statements are helpful for everything from managing finances to qualifying for a small business loan.
Benefit #1: Gain insights into financial health
You can compare cash inflows vs. outflows, cash balance, and how many cash buffer days you have. Tracking this information over time helps identify when a problem pattern is emerging.
Let’s look at a simplified example to see how this works.
The owner of Red’s Pizza notices that the ending balance on their November bank statement seems lower than usual. So, Red, the owner, gets out their previous bank statements for the last six months. Sure enough, the cash balance started decreasing over the summer.
In July, the ending balance was $12,100, similar to the ending balances in May and June. But in August, there’s a drop that happens again in September and October.
Red then looks into the transaction details and notices that the costs for tomato sauce and flour have increased. As a result, the business spent $200 more a month on ingredients without increasing revenue.
To help get cash flow under control, Red decides to raise the price of the pizzas, helping to increase revenues and enabling Red to deposit more money into the business bank account.
If Red had kept a closer eye on the business bank statements for Red’s Pizza, he might have noticed the increase in costs earlier — giving him more time to course-correct and prevent a drop in the cash balance.
Benefit #2: Find discrepancies and rule out fraud
U.S. businesses lose an average of $300,000 every year due to invoice fraud.
While your business bank statements alone can’t protect your company from fraud — you’ll need more tools such as robust accounts payable and accounts receivable systems — they are a good starting point for spotting issues. You can easily compare your bank statements with your financial records to identify discrepancies.
For example, you might notice a charge from a name you don’t recognize. Contact your financial institution to correct errors and dive deeper into your accounting books to ensure any inconsistencies aren’t a red flag for fraud.
Benefit #3: Apply for a business loan
Imagine what you could do with a business loan. You could pay off outstanding debts, invest in resources, or hire more employees. But no matter where you go, lenders will ask for your business bank statements.
Lenders use this information to verify that your company manages its finances responsibly and ensure you won’t have trouble repaying the debt. They will also use the statement to ascertain your average monthly balance, average total deposits, and average total withdrawals.
Without business bank statements, getting a competitive business loan is impossible: You might only qualify for high-interest financing, which will, in turn, increase your business costs and reduce cash flow.
Benefit #4: Plan ahead
Because it’s a record of your financial transactions, you can use past business bank statements to estimate monthly revenue and spending better and use business forecasting to make informed long-term plans.
But one thing to remember when using bank statements for planning ahead: A business bank statement isn’t the same as your transaction history .
Where transaction history shows you all the past transactions that occurred in that account, the bank statement is a monthly snapshot of activity. As a result, a bank statement might miss some recent or pending transactions.
Take control of your business finances with an all-in-one solution
While business bank statements are not a granular view of your business’s overall finances, they are a helpful tool that lets you see past performance so you can gain a clearer picture of your incoming and outgoing transactions — allowing you to prevent fraud, apply for loans, and plan for the future .
But analyzing every monthly statement is time-consuming because records need to be gathered for every transaction. That’s where software that simplifies payments comes in: BILL provides an all-inclusive solution via automated accounts payable and accounts receivable software.
It helps you navigate every aspect of your income and spending without the hours of manual labor spent tracking and recording financial transactions. Learn more about the benefits of automating your finances with BILL.
BILL and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. BILL assumes no responsibility for any inaccuracies or inconsistencies in the content. While we have made every attempt to ensure that the information contained in this site has been obtained from reliable sources, BILL is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this site is provided “as is”, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied. In no event shall BILL, its affiliates or parent company, or the directors, officers, agents, or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in this site or for any consequential, special or similar damages, even if advised of the possibility of such damages. Certain links in this site connect to other websites maintained by third parties over whom BILL has no control. BILL makes no representations as to the accuracy or any other aspect of information contained in other websites.
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Financial Plan Projections Template for Startups This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.
A startup budget or cash flow statement A startup costs worksheet A pro forma (projected) profit and loss statement A pro forma (projected) balance sheet Your lender may also want these financial statements: Sources and uses of funds statement Break-even analysis Putting these Statements in Order
Executive summary. Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company's leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.
Thankfully, you don't need an accounting degree to successfully put your budget and forecasts together. Here is everything you need to include in your financial plan along with optional performance metrics, specifics for funding, and free templates. On this page Key components What to include Ratios and metrics Templates and tools
Common items to include on a profit and loss statement: Revenue: total sales and refunds, including any money gained from selling property or equipment. Expenditures: total expenses. Cost of goods sold (COGS): the cost of making products, including materials and time. Gross margin: revenue minus COGS.
The income statement, for example, shows whether a company is generating a profit, while the balance sheet reveals the current status of the business as of the date listed on that document (vs. for the year or quarter overall, as with the income statement).
7 Business Plan Examples to Inspire Your Own (2023) Read Time 6min. If you're writing a business plan, check out these 7 real-world and made-up examples to help guide your own. Email address Create your store Build your dream business for $1/month
8. Panda Doc's Free Business Plan Template. PandaDoc's free business plan template is one of the more detailed and fleshed-out sample business plans on this list. It describes what you should include in each section, so you don't have to come up with everything from scratch.
The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. The structure ditches a linear format in favor of a cell-based template.
This type of pro forma projection looks at the past financial statements of your business, plus the past financial statements of a business you want to buy. Then it merges them to show what your financials would have looked like if you made a business combination (or merger) earlier. ... So you can plan where to move money, when. Example pro ...
How to Write the Financial Section of a Business Plan An outline of your company's growth strategy is essential to a business plan, but it just isn't complete without the numbers to back it...
Through the financial section, you can: Forecast your business's future finances Budget for expenses (e.g., startup costs) Get financing from lenders or investors Grow your business Sounds pretty great, right? But according to one study, only 35% of surveyed business owners completed a business plan.
For your business plan, you should create a pro forma balance sheet that summarizes the information in the income statement and cash flow projections. A business typically prepares a balance sheet once a year. Download the Sample Balance Sheet Template. Once your balance sheet is complete, write a brief analysis for each of the three financial ...
Example of an Income Statement Below is a portion of ExxonMobil Corporation's income statement for fiscal year 2021, reported as of Dec. 31, 2021. Total revenue was $276.7 billion. Total...
business financial plan 1. financial overview 2. assumptions. page 2 3. key financial indicators and ratios . page 3 4. break-even analysis . page 4 5. financial statements 5.1 pro forma profit and loss statement . page 5 5.2 pro forma cash flow statement . page 6 5.3 pro forma balance sheet . page 7
Pro Forma Income Statements for a Business Plan. Pro forma statements for a business plan can take many different forms, but they all typically include information on sales forecasts, expenses, capital expenditure plans, and funding requirements. A pro forma statement that is included in a business plan template should also include financial ...
Below you will find a list of the key assumptions by the financial statement: Income Statement The income statement assumptions should include revenue, cost of goods sold, operating expenses, and depreciation/amortization, as well as any other line items that will impact the income statement.
Here is a basic template that any business can use when developing its business plan: Section 1: Executive Summary Present the company's mission. Describe the company's product and/or service offerings. Give a summary of the target market and its demographics.
There are three primary financial statements a business needs to generate and regularly monitor: Profit and loss statement, or P&L, also known as the income statement. Balance sheet. Cash flow statement. Each statement provides insights into how the business is doing that can help owners and managers recognize how to improve operations.
This financial projections template pulls together several different financial documents, including: Startup expenses. Payroll costs. Sales forecast. Operating expenses for the first 3 years of business. Cash flow statements for the first 3 years in business. Income statements for the first 3 years in business. Balance sheet.
That's where the business bank statement comes in: Business bank statements are helpful for everything from managing finances to qualifying for a small business loan. Benefit #1: Gain insights into financial health. You can compare cash inflows vs. outflows, cash balance, and how many cash buffer days you have.